It's a tough world for a flirty company on the make. In summer 2008, media honchos like Barry Diller and Jeffrey Katzenberg were making eyes at social networking companies like Slide, the well-funded maker of Facebook applications started by PayPal founder Max Levchin. Just in time for this year's conference, Slide is laying people off and scrapping its failed business model.

Levchin got cozy with Diller last year, but Twitter is playing hard to get: CEO Evan Williams "attended Wednesday's sessions, but didn't speak up when other executives expressed doubts about Twitter's revenue prospects," according to the New York Times' Andrew Ross Sorkin, who adds that both Diller and cable honcho John Malone (pictured together) disparaged Twitter's advertising prospects.

They doth protest too much: Any firm that can reunite those bitter ex-partners (and former courtroom nemeses) is clearly a stimulating concern.

The redesign is built around a new "stream" of status updates. It closely mimics the "timeline" feature of Twitter, a much smaller service which, like Facebook user, allows people to post short messages which are then broadcast to friends. But in adopting Twitter's simplified look, Facebook threw out or hid a whole host of features users have grown used to. (Try finding upcoming events, for example, or looking for updates on new friends people have made.)

A Facebook application built to poll users on the design is running 94 percent against the new design, with some 716,000 "no" votes against 44,000 "yes" votes.

One might argue that Zuckerberg didn't do the design to please the lowest common denominator of users, but instead was trying to win over the cognoscenti of Silicon Valley, who have been buzzing nonstop about Twitter. If so, he missed that target badly, too.

Facebook has a special program called "Great Apps" to recognize the best third-party add-ons to the social-networking sites. The favored few include iLike, a music app, and Causes, an app built by a startup called Project Agape which helps people rally their friends to various social issues.

Both have close ties to Facebook: Marc Bodnick, an influential Valley investor who sits on iLike's board, is the brother-in-law of Facebook COO Sheryl Sandberg. Project Agape is backed by former Facebook president Sean Parker, who still owns an estimated 5 percent stake in the company.

But guess who's been dissing Facebook's redesign on Facebook? iLike CEO Ali Partovi and Project Agape's Joe Green. Green recently wrote:

The stream does not out-Twitter Twitter and under-Facebooks Facebook.

Partovi snarkily noted that the new design inspired him to join Twitter — and employees at Slide, another Facebook-app maker, applauded his wit:

And mind you, these are people who make a living off Facebook. If they hate it, what friends will Zuckerberg have left?

At its founding, Slide was supposed to be a shopper's search engine. That model was dropped and before today's news, Slide's plan was to somehow charge advertisers for conversations its social network widget users had about brands. That was too gimmicky and unproven for Madison Avenue. One exec there told me he expected "Slide and [it's closest rival] RockYou will get weeded out." Now Levchin says: "Television is a world that advertisers love." More than widgets? Let there be no doubt.

If Levchin can turn Slide into an old school brand advertising-supported business with massive scale he might just live up to his investors expectations. For perspective, remember that ad-supported Readers' Digest has half as many people as subscribers and a private equity firm bought it for $1.6 billion in 2007.

Levchin's Slide promotes the practice of sharing every precious and not-so-precious moment with the world at large, and that his company has massive amounts of Facebook user data at its disposal thanks to the popularity of the company's Facebook applications. Yes, the rich are different than you and I: They don't buy into the crap they sell us.

• Wendi Deng Murdoch, MySpace China
• Chris DeWolfe and Tom Anderson, MySpace
• Max Levchin, Slide
• Robin Li, Baidu
• Markos Moulitsas, DailyKos
• Elon Musk, SpaceX
• Ali and Hadi Partovi, iLike
• Mika Salmi, MTV
• Dmitry Shapiro, Veoh
• Quincy Smith, CBS
• Andrew Ross Sorkin, New York Times
• Peter Thiel, Clarium Capital
• Evan Williams, Twitter
• Andrew Zolli, PopTech

The list is topped by an widget called Mob Wars, which exhorts users to "Join the Mafia, and start your own mob. Band together with your friends to become the most powerful force in the elite criminal underworld of Facebook." DeveloperAnalytics says Mob Wars' users return to its page 60 times a day. Facebook's most popular application, Slide's FunWall, only shows up fifth on the list, because users load its pages just two or three times a day. Here's what DeveloperAnalytics didn't account for in running the numbers: Slide's opening an office in New York to sell its inventory to major brands, while Mob Wars ads ask if you want to take an IQ challenge.

But he is not above a little strategic flaunting. Slide hired a Hollywood props firm to create life-sized versions of the sheep and other icons from its SuperPoke Facebook app, displayed like museum exhibits at the party. Could rival RockYou afford such a gratuitous show of wealth? With their latest funding round not quite locked down, unlikely. It's considered bad form to spend money while you're out raising more. And that was Levchin's point in throwing the party: It's not quite that he was spending money for the sake of spending money. He was spending money to show that he could.

VCs already were asking why should I not worry about Facebook copying [your widgets]. But it was a theoretical question. Now, it is practical and amplified. I think that Facebook has really killed the potential for investment in the platform or the attractiveness to entrepreneurs. I am unaware of a single VC investment in a Facebook app company post the new regime (Sheryl, Elliot, policy enforcement). and now this will definitely affect matters. The last two VC investments I believe were Friends For Sale and SGN [Social Gaming Network] — doubt either investor is happy nor would they do the same deal again.

If our widgetmaker source is correct, it is bad news for at least two Facebook hangers-on — Zynga, a widgetmaker and SocialMedia, an ad-network for Facebook widgetmakers. Both are trying to prove him wrong by raising a new round of financing.

A source tells us SocialMedia founder Seth Goldstein spent last week in New York trying to raise $20 million. A VC in the community confirms he's recently heard Goldstein's pitch. Goldstein himself tells us, "We're talking to investors," but he wouldn't confirm the terms.

Zynga, which in January raised $10 million in funding from Union Square Ventures, Peter Thiel, Reid Hoffman, and Bob Pittman, is said to have hired a bank in order to find more funding.

Goldstein says that those worried about worried whether Facebook's aggressive moves against Slide will stunt VC investment in startup widgetmakers should worry about top widgetmakers like Slide or its closest rival, RockYou, instead.

These guys wanted to believe there wouldn't be a long tail of apps on the Facebook platform. But Facebook wants lots of little apps relevant to lots of little groups. Two guys from Estonia will be able to beat a team of 45 top flight engineers. Facebook doesn't want three major developers taking over the platform like some kind of CBS, NBC and ABC. Top Facebook apps aren't all going to be made South of Market.

Remember, Goldstein's a Facebook bull because his business depends on it. But one way to read his comment is as a confirmation that no one — including VCs — should expect widgetmakers to turn into large media companies. There may be a future on the Facebook platform, but last year's frenzy that once led HotorNot founder James Hong to declare the Facebook platform "the new Internet"? It's over.

"Yes, we view this feature as directly competitive to a relatively small part of our Top Friends functionality," Slide's Keith Rabois told us. "A developer on any platform must expect that their popular, but simple, features will be absorbed into platform over time."

But none of this has the salesman in Rabois down. He goes on:

You can see that Top Friends has a very large number of complex features that have a complicated back-end (Awards, Visual Personality, Music, world-class skins) — we expect those will continue to be long-term strategic advantages over other large developers and the platforms themselves

The secret of social networking revealed: world-class skin! We always suspected as much.

There are policies Facebook has issued, but there is always room for interpretation - and in light of current changes, the interpretation is a lot more stringent now in contrast to before.

Facebook's probably getting strict because its preparing for a relaunch of its design in July. Or — and this pure speculation — the third-party security firm Rock You's rival Slide hired to audit its own privacy might have gotten paid a little extra to take a close look at the competition and alert Facebook to any infractions. We wouldn't put it past hypercompetitive Slide founder Max Levchin and his crafty sidekick, Keith Rabois.

Slide rival Rock You's Super Wall saw traffic plummet 70 percent in the last week. InsideFacebook's Justin Smith speculates the dip is due to "some kind of punitive action against the application" over privacy concerns by Facebook, "perhaps by restricting feed access or by lowering the application’s notification or invitation limits." Another source tells us Flixster, the widgetmaker behind the Movies app, is going through similar punishment from Facebook over privacy concerns.

Despite the blow from Facebook, Shen told SAI that unlike its closest competitor, Max Levchin's Slide, RockYou intends to keep developing for the platform. RockYou will need to — especially if developer Blake Commagere wrestles back control of his popular Vampires and Zombies apps. (Photo by califrayray)

When only 8.5 percent more money buys 66.6 percent more inventory, you know what's happened to prices. CPMs, the price advertisers pay per thousand pageviews, have plummeted. You can probably thank pageview-creating monster social networks like Facebook and MySpace for that. Either way, it's probably not a great time to open an ad sales shop in New York. Not that we know anybody doing that.

Facebook's upcoming redesign eliminates much of the viral growth widgetmakers such as Slide enjoyed during the platform's first year and these developers aren't happy about the changes. Last month an executive at one of the widgetmakers told us this lost enthusiasm for the Facebook platform seriously damaged the company's value.

FB's valuation is driven by the perception it can serve as a platform (or launching pad) for derivative businesses. Without that perception, FB is a $3-5 B company. Period.

the success of campaigns on our popular products, such as SuperPoke!, Top Friends and FunWall, has attracted the attention of not only top brands, but also top talent like Jason.

If only attention were as good as cash. Then Slide might be more than the online version of the musicians in every corner of New York's subway system — amusing, nice to have around while waiting for a train or a page to load, but hardly worth $550 million. U.S. marketers spent a paltry $600 million on social media advertising in 2007 — the same amount Procter & Gamble will spend over two months on its entire marketing budget and a tiny fraction of the $18 billion spent on interactive advertising last year. Somehow, we don't think a bunch more SuperPoke inventory flooding the market is going to fix the problem.(Photo by bk . ninja)